economics

January 16, 2010

Chinese Sports Brand Takes On Nike= Li Ning opened its first U.S. store in Portland, home to the sportswear giant’s headquarters.

Filed under: Uncategorized — ktetaichinh @ 6:54 am
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As part of its latest marketing strategy to attract U.S. consumers, Li Ning has chosen a few sporting goods to feature in its Portland store. These products include badminton, basketball and table tennis gear as well as a line of kung fu and tai chi themed sportswear.

A Li Ning spokesperson in Hong Kong told Forbes that Li Ning will begin to enter the international market between 2009 and 2013.

“Its first store in Portland is a trial for the company to test and to get familiar with the U.S. market. With actual data to form a more concrete plan, Li Ning is expected to expand and penetrate the international market from 2014 to 2018”, said Philip Lo of iPROgilvy on behalf of Li Ning

Lo added that the mainland Chinese market is still Li Ning’s major stream of income now and in the near term. Li Ning did not release official figures about its market share and ranking in China. According to a research report by BofA Merrill Lynch, Nike was the most popular sport brand in China with 19% market share in 2008, while Adidas ranked second with 15% share and Li Ning third with 11%. The brokerage estimated Li Ning to have overtaken Adidas in 2009 as the second-largest player in China’s $10 billion sportswear industry.

Li Ning’s previous earnings announcement showed that its entire chain of about 7,000 stores across China recorded a total revenue of 4.0 billion yuan ($595.9 million) in the first six months in 2009. Citigroup analysts estimated Li Ning would post 8.5 billion yuan ($1.2 billion) in annual sales for 2009, up from 6.7 billion yuan ($970 million) in the previous year.

Some other industry analysts even predict Li Ning might have unseated Nike ( NKE news people ) as China’s bestselling sport brand last year. Nike is estimated to book around $1.1 billion in sales in 2009.

The opening of its Portland store near Nike’s headquarters is therefore viewed as Li Ning’s attempt to challenge its U.S. big brother.

In an interview with Reuters in December, Li Ning’s chief executive, Zhang Zhiyong, said the U.S. expansion was Li Ning’s move “to test the water” before moving forward with its goal of becoming a major international brand within a decade. Zhang revealed that Li Ning set up a product research and development center in Portland about a year ago to prepare for its overseas path.

Set up and controlled by China’s “Prince of Gymnastics,” Li Ning, who won three gold, two silver and one bronze medal in the Los Angeles Olympic Games in 1984, the company manufactures and markets sports products including footwear, apparel, accessories and equipment.

Besides operating about 7,000 Li Ning stores, Li Ning Co. also distributes products under its Z-DO brand to large Wal-Mart-style shops called hypermarkets. In a series of mergers and joint venture agreements undertaken to dominate China’s sports market, Li Ning acquired the famed Chinese table tennis brand Double Happiness in 2008 and entered into an exclusive 20-year license agreement to distribute and sell licensed products from the Italian sports fashion brand Lotto in China.

After strengthening its foothold at home, Li Ning opened its first overseas store in Singapore last year. The second overseas outlet, featuring a badminton theme, began operations in Hong Kong in December.

Market capitalization of the Hong Kong-listed Li Ning reached nearly $3.5 billion after its share price has surged more than double in the past year.

HONG KONG — In its quest for international recognition, Chinese sports brand Li Ning wants to take on world-class competitors. That’s why it opened its first U.S. outlet in Portland, Ore.–the same city where Nike‘s headquarters are situated.

There was neither ribbon cutting nor dragon dancing when Li Ning ( LNNGF news people ), China’s largest retailer and supplier of sporting goods, opened its store on NW Hoyt Street near Portland’s central post office on Jan 4. Yet, Li Ning’s quiet entry into the U.S. market stirred up interest in Oregon’s biggest city, a hub for Nike‘s ( NKE news people ) designers, distributors and buyers

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